The confirmation about CPU price increases came as Intel and AMD reportedly informed customers about their plan to do so in March and April, respectively, with OEMs facing extended lead times for such products amid broader, AI-driven component shortages.
Intel executive David Feng confirmed to CRN this week that the company has raised CPU prices for OEMs in part because of the chipmaker’s ongoing supply constraints.
“We’ve been working closely with OEMs based on commodity price increases and the overall supply-demand situation,” said Feng, vice president and general manager of PC segments in Intel’s Client Computing Group, in a Monday interview.
[Related: Profitability Pressure: How Component Shortages Are Threatening Channel Margins]
“We have been updating our prices to the OEMs,” he added, declining to discuss details. “OEMs are working closely with their downstream partners to reflect system price points accordingly.”
Feng made the comments in an interview ahead of the company’s Wednesday launch of the Core Ultra Series 3 processors with Intel vPro, the umbrella of silicon-based management, security and optimization technologies it provides for commercial PCs.
The confirmation about CPU price increases came as Japanese publication Nikkei on Wednesday reported that Intel and AMD have informed customers about their plan to do so in March and April, respectively, with OEMs facing extended lead times for such products. AMD did not respond to a request for comment by press time.
The dynamics could compound the issues of rising hardware prices and product supply volatility in the channel, which have been mainly driven by the AI-fueled global memory shortage. These matters are creating unprecedented margin pressure for solution providers as deals become more complicated, customers ask partners to absorb some of the extra cost and OEMs take steps to protect themselves in ways that are impacting partners, as CRN has reported.
However, Intel has said that any CPU price increases wouldn’t come close to what’s happening with memory chips due to demand from AI data centers.
Intel CPU Shortage Driven By AI Data Center, PC Demand
The prospect of Intel raising CPU prices has been looming because of a shortage that started in the second half of last year, driven mainly by higher-than-expected demand for its server CPUs, particularly from new AI data centers. The chipmaker has also reported a similar dynamic with older generations of processors for PCs.
Intel has said that supply issues would peak by the end of March as it prioritized production for server CPUs as well as midrange and high-end client CPUs, with the expectation that production capacity will improve in the following quarters. The chipmaker’s supply issues helped AMD reach record-high x86 CPU market share against Intel in the fourth quarter of last year, according to CPU-tracking firm Mercury Research.
“The near-term market demand for CPU across client and data center is very, very high, and we’re working very hard to keep up and support the demand, so we are monitoring the market dynamics very closely,” Feng said on Monday.
Regarding the supply situation for the Core Ultra Series 3 processors, the executive reiterated comments made by Intel CEO Lip-Bu Tan and CFO David Zinsner from the company’s January earnings call, saying it remains “on track” with high-volume production ramp of the lineup’s underlying 18A manufacturing process.
“We’re pretty happy about that,” he said.
Lenovo Exec Sees Shortage Of High-End Xeon CPUs
In an interview with CRN at Nvidia’s GTC event last week, Lenovo data center sales executive Vlad Rozanovich said his company is starting to see shortages of “certain Intel CPU configurations,” including higher-end Xeon 6 “Granite Rapids” processors.
The executive attributed this to ongoing demand for GPU-accelerated servers as part of the AI data center boom, which has also driven shortages of memory chips and GPUs.
“As GPU servers have seen an uplift [in demand], some of those CPUs that are associated with those GPU servers are seeing that same type of kind of heavily or moderately constrained environment as well,” said Rozanovich, senior vice president of Lenovo’s Infrastructure Solutions Group.
These component shortages have prompted Lenovo to tell some customers and channel partners that the company won’t be able to ship certain data center products “within the next six months,” according to the executive.
Rozanovich suggested that supply issues with Intel’s latest Xeon CPU products is prompting some customers to look at older generations, including the fifth-generation Xeon “Emerald Rapids” chips and even the second-generation Xeon “Cascade Lake” lineup. Intel is expected to make its final shipments of the latter group of chips by October after the company discontinued the lineup more than two years ago.
“We’re also seeing some more customers ask about AMD as part of that too. Not that they’re immune to this,” Rozanovich said.
Channel Execs Note Shortage Of Lower-End CPUs
Executives in the channel have also been noticing Intel CPU shortages, with Mike Turicchi of Manassas, Va.-based systems integrator NCS Technologies telling CRN earlier this month that he is seeing lead times for entry-level and midrange Xeon processors extending out to “as much as six months for any new orders.”
The solution provider executive said his company is experiencing major supply issues with Intel-powered Chromebooks too, with vendors telling NCS Technologies that “it could be a year before we can get product on any new orders.”
Greg King, vice president of vendor management at Harrisburg, Pa.-based D&H Distributing, also said earlier in the month that he had heard about modest price increases for Intel CPUs coming in March but added that the only supply issues he’s seeing with the chipmaker are around Intel-based Chromebooks.
“We are definitely seeing shortages on Intel Chromebooks, and many partners are looking at MediaTek alternatives,” he said of a Taiwanese CPU competitor.
Intel Global Chief Says CPU Shortage Is Impacting ‘Everyone’
Intel Global Channel Chief Dave Guzzi told CRN last month that the CPU supply constraints are likely impacting every partner “across the board.”
“I think that probably across the board, partners are not getting as much product from us as they would like. I think that’s probably universal. [Cloud service providers], OEMs, builders, just across the board,” he said.
While Guzzi said at the time that Intel would likely raise prices for CPUs, the increases would be minor compared with the skyrocketing prices of DRAM and NAND chips.
“There may be some relatively small price changes [for CPUs], but nothing like what we’re seeing in the memory market,” he said.
